Ever since Yahoo discontinued their group chat service I've been looking for another free chat room service along similar lines and I was wondering if you guys had any suggestions? Currently I'm looking at a few potential options... the first one is ICQ because I noticed they have several public chat rooms and I'm trying to see if it's possible to setup a private room just for a few friends. The other option is through a website called clobby.com which works by using your Facebook login.

If anyone knows how to setup ICQ chatrooms or can suggest another chat service similar to Yahoo, please let me know.

Can't go wrong with IRC. It's been around since 1988 and it's still going very strong. As far as servers go, there's many of them where you can create a channel on.

freenode.net
efnet.org
geekshed.net
mixxnet.net
ircjunkys.com

I would say geekshed and mixxnet are fairly easy to get set up with. You just have to register the channel and your nick and that's it. They will hook you up with channel on their server, they are very reliable. You have control over the security and everything.

The only reason why I suggest IRC is because of it's small footprint and since it's just you and your friends you can have tons of fun on it. You can stay idle for long periods of time without worrying about the applications taking up much resources or anything like that. You can chat in private with each other and you can also exclude people that you don't want in the conversations. It's been around for a long time so you know it works and it will continue to be around for just as long as it has been around already.

Since you're posting this in the Web design/hosting section, i'm assuming you're looking for something to put on your website. If not, then my apologies.

There are two decent web based chat systems that i'm aware of. phpFreeChat and X7Chat. If your current web host is running a standard cPanel based system there's a good chance one or both of those will be available through a quick installation module in your cPanel.